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The government in its bid to achieve revenue targets assigned by the International Monetary Fund (IMF) may increase the petroleum development levy (PDL) charge to Rs60 per litre for High-Speed Diesel (HSD) in order to meet its target of Rs869 billion.

The projection was made by JS Global, a brokerage house, in a report on Friday.

“Declining POL sales remains a concern in relation to meeting the PDL collection targets established in coordination with the IMF,” said the brokerage house.

POL sales in Pakistan clocked in at 1.06 million tons, down significantly by 31% YoY and 25% MoM in September 2023, the lowest level since the COVID lockdown in March 2020.

This decline was primarily attributed to record-high prices, smuggled oil from Iran, and lower FO-based power generation, experts said. Ex-Furnace Oil (FO) sales clocked in at 0.97 million tons in September 23, down 20% YoY and 24% MoM.

During the first quarter of FY24, oil sales clocked in at 3.8 million tones fall 15% YoY. EX-FO, oil sales fell 1% YoY to 3.5 million tons.

JS Global, in its report, shared that a 20% YoY decline in sales volumes will result in a shortfall of approximately Rs81 billion in achieving the FY24 PDL collection target of Rs869 billion.

“This potential inability to meet the FY24 PDL target can be attributed to the reduced OMC sales and the government’s reluctance to raise PDL charges on HSD,” said the brokerage house.

The government in bid to increase revenue collection imposed PDL on Motor Spirit (MS) and HSD in the previous fiscal year.

PDL charges reached Rs50 per liter for both MS (in November 2022) and HSD (by April 2023), which helped improve PDL collection despite low sales volumes throughout the last year. Subsequently, the PDL on MS was further raised to Rs55 per liter in July and reached Rs60 per liter by September 2023.

“We believe there is a possibility that the government may consider increasing the PDL charge to Rs60/liter for HSD as well in the near future in order to reach the ambitious target of Rs869 billion.

“Additionally, pressures on tax collection might lead to the imposition of GST charges on these products, which are currently at a zero rate, however, higher retail prices may further have an unfavourable impact on POL product volumes,” JS Global concluded.

Comments

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KU Oct 06, 2023 03:48pm
Foolish and unreasonable decision at the cost of an already dwindling industrial and agricultural output, as well as resultant unemployment. But Raj Baboos are not willing to cut public expenditures, ridiculously criminal.
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Tulukan Mairandi Oct 06, 2023 05:36pm
Great. Squeeze us
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Az_Iz Oct 06, 2023 07:26pm
The country could have done this years ago instead of selling petrol at half the price compared with everyone else. It could have used this money to build large dams, ML-1 railways and power plants with it’s own resources. And things would have been much better for everyone.
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Kashif ALI Oct 06, 2023 08:05pm
Government must cut its own expenditures and must bar its departments from defaulting on utility bills. On the other hand, extracting tax in form of PDL seems to be effective way of taxing the untaxed segments of the society. Agriculture, Retail and wholesale traders and other segments of informal economy. No doubt, the honest and sincere lot of taxpayers will bear the brunt. Little choice other than increasing the Levy.
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Usman Oct 06, 2023 08:45pm
@Az_Iz, but than who would make the masses understand it .Thanks to care taker govt right steps are being taken.
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Ghareeb Awam Oct 07, 2023 12:54pm
I am glad to see this all because the caretaker government is doing exactly what I had thought - squeeze every single drop of blood out of the people. Carry on. I shall be happier.
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Faiq Oct 07, 2023 01:39pm
Completely agree with @KU This is one of the stupidest decisions ever. Expensive Diesel makes almost everything expensive compared to Petrol which makes relatively fewer things expensive. They can keep Petrol prices up and make Diesel cheaper instead of the other way around which is what they are doing. What good is a 250 rupees dollar (their target) if almost everything keeps on getting more expensive. They should also make electricity cheaper while improving the supply and raise domestic gas prices (but only while drastically improving the gas supply) to fill IMF quotas. If there is enough gas supply people can handle the burden of the gas bill but electricity has gotten too expensive for the common man (and also most well of people to run ACs).
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